Brazil is the largest country in Latin America, and the most populous, with more than 207 million people. Brazil consists of 26 states, a single Federal District, and 5,570 municipalities.
In 2011, Brazil had the sixth-largest economy in the world, but its GDP declined in the following years, and Brazil now ranks as the ninth-largest economy. Some of the reasons for that include the depreciation of the real against the US dollar and the economic recession that began in 2015.
In 1941, Brazil banned all games of chance, and the only legal forms of gambling were the state-owned lottery and horse racing betting. Because poker is considered a game of skill rather than chance, it is legal.
The government predicts potential economic growth if the gambling industry is regulated and properly taxed. That is why Congress is currently discussing two bills that would introduce new regulations on casinos, bingo halls, online gambling, and lotteries. Earlier this year, Deputy Eduardo Bismarck presented a bill aimed at amending the current General Tourism Law, adding casino hotels to the list of tourism service providers in Brazil.
These are not the first steps toward gambling regulation in Brazil. In 2018, Law No. 13,756 was introduced, bringing significant changes to the country’s gambling scene. Before that law, sports betting was illegal in Brazil, but once it took effect, fixed-odds sports betting became legal. This change led several sportsbook operators to accept Brazilian players.
Gambling Regulation in Brazil
Since all games of chance were banned in Brazil in 1941, the country’s gambling market has remained largely unregulated for more than 70 years. Although bingo and slot machines were legalized in 1993, they were banned again in the mid-2000s. As a result, regulation of the gambling sector in Brazil is still in its early stages, and most of the industry remains unregulated.
Although the word ‘game’ appears in the Civil Code of Brazil, it is not specifically defined. Nevertheless, scholars have offered several definitions of ‘game’ and ‘bet’ over the years. Generally, while the result of a game depends on the actions taken by participants, the outcome of a bet is unrelated to the actions of the parties involved. Even though this distinction has not been codified in law, it is widely accepted and applied.
Games of Chance
Games of Skill
LotteriesOnline Gambling
Because almost all forms of gambling are currently illegal in Brazil, online play is also prohibited for Brazilians. However, there is a loophole that allows offshore operators to accept players from Brazil.
One contract-related law states that a contract is considered concluded in the place where it is proposed. This is mentioned in Article 9, paragraph 2 of Decree-Law 4,657, as well as in Article 435 of the Civil Code of Brazil.
Under this law, an offshore gaming operator licensed in its own jurisdiction may accept Brazilian players. In that case, the contracts between the foreign operator and Brazilian users are subject to the laws of the jurisdiction where the operator is based and licensed.
Although offshore websites can technically accept Brazilian customers, residents of Brazil who make payments to these foreign operators may face some legal consequences. That said, the Brazilian government has not taken any action to prevent Brazilians from gambling at offshore websites.
Gambling Regulator
As already mentioned, all forms of gambling except lotteries and horse racing are illegal in Brazil. Under Decree Law 50,954, Caixa maintains a monopoly on lotteries in the country. Meanwhile, under Law 7,291 and Decree-Law 96,993, the Ministry of Agriculture, Livestock and Food Supply regulates horse racing betting.
The Ministry of Sport has classified poker as a sport, so it is not regulated as gambling in Brazil. Social games, or any other variation of skill-based games, are also not regulated. At the same time, the Ministry of Economy oversees prize distributions authorized either by the Secretariat or by Caixa.
Caixa has issued licenses to more than 13,000 lottery vendors. There are also about 200 agencies and agents authorized to accept bets on local and international horse races. As poker has gained popularity, numerous poker clubs have opened in the country’s largest cities.
With the introduction of Law 13,756 in 2018, Brazil created a fixed-odds betting lottery system. The law defines fixed-odds betting as a system of wagers on sporting events, with the prize for a winning bet announced at the time the wager is placed. Fixed-odds betting is expected to be regulated by the Ministry of Economy.
Currently Discussed Reforms in the Legislation
Applying for LicensesTaxation on Legal Gambling Activities
Under Brazilian law, prizes obtained from lotteries, horse racing bets, or prize draws are subject to taxation. Residents of Brazil who win monetary prizes must pay a tax of 30% of the prize amount. If the prize is paid to residents abroad, the tax is 15% of the prize amount. For residents of low-tax jurisdictions, the tax on prizes is 25%.
When Brazilian residents win prizes paid in goods or services, they must pay a tax of 20%. For residents abroad and those in low-tax jurisdictions, the tax is 15% and 25%, respectively.
If a horse owner receives a prize in a turf competition, a tax of 15% applies. If the horse is owned by a legal entity, the tax withheld from the prize is treated as corporate income tax. When a Brazilian legal entity receives the prize, it must also pay social contribution taxes on gross revenue and net profits.
Under Law 7,291, operators that offer horse racing betting must pay a monthly fee to the CCCCN. The fee is calculated on bets taken in the previous month and must be less than the winnings paid during the same period.
The fee rate depends on the reference value published by the CCCCN. If betting revenue is between 1 and 2,500 times the RV, the operator is exempt from the fee. Meanwhile, if revenue ranges from 2,501 to 3,500 times the RV, a 0.5% fee applies. Operators with betting revenue between 3,501 and 4,000 times the RV pay a 1% fee. Lastly, if betting revenue exceeds 4,001 times the RV, a fee of 1.5% applies.